We show that bank risk rises, particularly for larger banks and those with greater interest-sensitive liabilities, during times of economic policy uncertainty through two economic channels: ‘credit rationing’ and ‘revenue diversification’. The credit rationing channel shows that economic...

We use data on price expectations from a survey of randomly sampled smallholder farmers in Mozambique. Across all crops, farmers expect higher prices in the lean season. Yet, farmers report selling mostly within two weeks of harvest at significantly lower prices with liquidity constrained...

This paper examines whether targeted credit rationing by banks can disrupt the operations of firms likely to generate negative externalities. We exploit a major regulatory initiative in the United States–Operation Choke Point–which targeted bank relationships with firms in industries with a...

Competition in the U.S. appears to have declined. One contributing factor may have been heterogeneity in the availability of credit during the financial crisis. I examine the impact of product market peer credit constraints on long-run competitive outcomes and behavior among non-financial firms....

The objective of this study is to identify the impact of managerial optimism on the corporate investment decisions of financially constrained firms in Jordan during the 2013–2019 period. The sample consists of 56 companies from the industrial and services sectors. The data was sourced from the...

This paper examines the impact of tax incentives on corporate risk-taking. Exploiting China's accelerated depreciation policy in 2014 as the exogenous source of variation, the difference-in-differences (DID) estimation shows that for the average firm in the sample, the accelerated depreciation...

This paper studies the effect of government contracts on trade credit by using cross-country firm-level data. Trade credit is defined as a firm's deferral of payment to its sellers when it buys material inputs. We apply the instrumental variable to take into account the endogeneity problem...

Financial frictions are a central element of most of the models that the literature on emerging markets crises has proposed for explaining the Sudden Stop' phenomenon. To date, few studies have aimed to examine the quantitative implications of these models and to integrate them with an...